Fisker to lose $762m in 2023, discusses strategic OEM partnership

The luxury EV maker said it is in talks with a “major automaker” for a possible strategic partnership that could include an investment in Fisker, joint development of one or more EV platforms, and North American manufacturing. The company has not announced who the potential partner would be and said the closing of any transaction would be subject to conditions. Back in 2020, Fisker signed a deal with Canadian automaker Magna Steyr to build its Ocean SUV in Graz, Austria, allowing Magna a 6% stake in Fisker, worth $3 billion at the time.

In its full-year 2023 results, Fisker said it would need to seek additional equity or debt financing to continue operations, as the company’s current resources are insufficient to meet its needs in the coming year, leading to “significant doubts about its ability .to continue as an ongoing thing”.

If this funding is not available, Fisker said it may need to reduce its planned level of investment in product development, and further scale back its operations, including further downsizing. It could also lead to a reduction in production of the Fisker Ocean SUV, which could have a negative impact on the company’s finances, depending on the results.

The company is currently in discussions with lenders about a cash injection that would be used for vehicle manufacturing and the ongoing transition to a dealer-oriented sales model. This model of Merchant Partners, announced in January this year, has received more than 250 expressions of interest from North American and European merchants, and 13 merchants have signed contracts. The 15% headcount reduction is largely related to this change in sales strategy.

Fisker’s total revenue for 2023 was $272.9m, with revenue of $200.1m in Q4. Both of these revenues exclude a total of $44.6m of deferred revenue that will be recognized in future accounts. The automaker’s gross margin for Q4 was -35%, with cash and cash equivalents totaling $395.9m as of December 31, 2023. During the same period, the company’s carrying value of finished vehicles and raw materials was $530m .

In terms of production, in Q4 Fisker produced 4,789 units of the Ocean SUV and delivered 3,818 vehicles to customers. For the entire year, the company produced 10,913 Fisker Seas and delivered 4,929 vehicles – a sharp fall from the 32,000-36,000 units predicted for the entire year.

“(Last year) was a challenging year for Fisker, including supplier delays and other issues that prevented us from delivering the Ocean SUV as quickly as we had hoped,” said Henrik Fisker, chairman and CEO, Fisker. “We also encountered unexpected setbacks in our efforts to establish a direct-to-consumer sales model in North America and Europe simultaneously.”

The CEO added that unexpected challenges affected the business, including rising interest rates, lack of skilled workers and identifying areas suitable for the direct-to-consumer sales model to operate effectively. As a result, the company relied on the Marketing Associates model. While the Business Partners model is seeing interest, Fisker added that the industry’s turmoil is a risk factor.

Looking ahead, the company has adjusted its outlook to a more conservative 20,000-22,000 Ocean SUV shipments for 2024 – although this is still four times what the automaker delivered in 2023. In the first half of this year, the company said it expects to generate cash due to sales of existing production vehicles in 2023 which are largely paid for. It added that it expects a higher than usual contribution of funds from the Ocean SUV that is produced and sold in the first half of this year as the company uses raw materials that are already purchased and in its inventory.